Unified Communications - the Next Disruption?

We increasingly trade in information and not in goods, and we have the ability to separate physical delivery of goods from virtual delivery of ideas. So in some ways, communication is in the process of replacing transportation. The potential for disruption will be huge. It will hurt a part of the economy, but it will also raise up a new industry and a new technology platform.

By Denis Pombriant
06/26/13 5:00 AM PT

I attended a Siemens analyst event last week, where the company announced a new product called "Project Ansible." Under a quirky embargo between us, I am able to say that much and a bit more, but I must point out that the full details will be available after July 16. Generally speaking, Ansible concentrates on unified communications, but I will defer until July any further descriptions or discussion of its rollout and road map.

That notwithstanding, Siemens has caused me to do some deep thinking about product category rollouts and their lifecycles, and that has made me go back to Arnulf Grübler's classic, The Rise and Fall of Infrastructures: Dynamics of Evolution and Technological Change in Transport. Grübler was associated with the International Institute for Applied Systems Analysis in 1990 when he published this, and while the book might be getting old, it still offers some great insights.

The Long Wave

Grübler traces transportation from the days of canals through the beginning of air transport after World War II and yes, there is an important CRM component to this.

If you look at the figure supplied here, you'll notice that each type of infrastructure has its rise and fall, as the title implies and as the S-curves amply demonstrate. If it looks like the curves were traced over by a fourth grader, it's because the idealized shape is imposed on actual data. See how well they overlap?

The 55-year span between peaks of each curve is also significant, as it represents a "long wave" interval first recognized by Nikolai Kondratiev
and others. It is the duration of an economic wave or paradigm, and there is a great deal of writing available on this subject.

Quick question: Where are we on the IT long wave? If we assume it started in about 1960, this paradigm in which we all earn a living is getting old. But I digress.

Here's what's most interesting to me. Canals were developed to move heavy raw materials like coal and iron ore from the mines to the factories -- and later some finished goods. They were replaced by railroads that in addition to moving freight, began doing business transporting people. In each case, the transportation mode supported a kind of communication.

Transportation of Ideas

Canals moving raw materials had little need to be more explicit communicators. Directions, bills of lading and the like were hand delivered on paper with the order. Rails, on the other hand, began to move people associated with raw materials as well as finished goods. People came along to sell the goods and train others about them. People also came along to provide pure services. Ball teams, politicians (arguably), business people, and circuses all traveled by rail and their principal interest was either communicating ideas or delivering a personal service to patrons. Life became richer because of transportation.

Rails moved people not associated with goods too -- people on private business and those bringing information from place to place. It is no coincidence that the telegraph spread at the same rate as rails, at least initially. When pure information was the only thing to be transported, telegraphy was better, faster and cheaper than sending a body.

Roads accelerated the trend rails started, enabling the movement of goods, people and, it should be said, ideas. Newspapers, for instance, extended their reach with trucking and eventually the telephone -- working on the same or very similar infrastructure -- replaced the telegraph for most voice communication.

The revolution in air travel has gone differently. While air freight has gained an important and lucrative part of the transport market -- sending an overnight package is no longer cheap -- air travel has not replaced roads and rail to the extent you might have expected. We travel long distances by air, but the flying car never took off due to energy concerns -- and because humanity's dreadful driving record is no endorsement for making everyone a pilot.

Yet the communication theme remains in place. People fly to communicate ideas in business and to communicate on a more personal level when flying for pleasure. Lurking in the background is the newfangled Internet, which nicely takes on the functions of the earlier telephone and telegraph, and which is competing with conventional transportation infrastructure.

We increasingly trade in information and not in goods, and we have the ability to separate physical delivery of goods from virtual delivery of ideas. So -- at least in some forms and for some needs -- communication is in the process of replacing transportation.

Creative Destruction

The potential for disruption that this presents will be huge. For example, the U.S. Business Travel Association estimates that during 2009, American companies spent US$234 billion in business travel costs. If they can find a way to communicate more through electronic means than by transporting people, that number will surely go down.

It will hurt a part of the economy in the same way that the interstate highway system and trucking drove a few nails into railroads' coffin. However, it will also raise up a new industry and a new technology platform that might likely exceed the revenues of what is being lost. That's the creative destruction that the economist Joseph Schumpeter wrote about in the 1930s.

Unified communications -- bringing together Internet, telephone, conferencing, software, video and social media -- has the capacity to be the disrupter of transport and the plain old next disruption. It might be the next thing on the horizon and the next platform we need to think about beyond ERP and CRM.

Already Microsoft, Shoretel, ATT, Siemens, and many other vendors have product sets in development to build out in this space. There is more work to do to bring so many disparate technologies together, but that work is under way. There is also a great deal of work to be done explaining unified communication to a skeptical market -- though naturally, there are early adopters to be found too. I also think unified communications will inform how we think about CRM in the years ahead.